Pai Tees Up Fresh Look at Competition

FCC signals big changes could be coming

Why This Matters

The FCC has signaled there could be major shifts in how it views competition and the video/broadband marketplace.

Chairman Ajit Pai has begun the next phase of his deregulatory remake of the Tom Wheeler-era FCC, and it could be the reshaping of the competitive landscape.

That word came in the form of his request for information on the state of competition in the video marketplace for the FCC’s 19th video competition report, as well as for input on its 13th Section 706 report.

The result will affect how the FCC views mergers, promotes deployment and regulates broadband, and the extent to which it deregulates broadcasters.

Under Pai’s predecessor, Wheeler, those reports did not actually come to any conclusion on how competitive various services were, though the Section 706 report did conclude, much to wired internet service providers’ chagrin, that wireless broadband was not a competitive offering.

That is all likely to change if the questions the FCC is asking are any gauge. And they likely are, given that the FCC’s release of the request drew immediate fire from anti-consolidation activists and Capitol Hill Democrats.

In the latter camp, a dozen Democratic senators have written the commission with concerns that wireless broadband might be considered a substitute for wired broadband. Their worry is that the generally slower speed of 10 Mbps downstream and 1 Mbps upstream could “redefine” high-speed broadband downward; they’ve asked the FCC to extend the comment period on the report by 30 days. The FCC decided to extend it by two weeks.

The FCC has only just begun collecting string on the new reports, and the assumptions they’re based on, but how it is asking the questions suggests major changes could be in the works, particularly given Republican Pai’s past criticisms of the report under Wheeler, a Democrat.

For example, the FCC asks in the video competition report, “Are the distinctions between [multichannel video programming distributors] and [online video providers] diminishing as OVDs offer packages of linear video programming?”

It also wants “data, information and comment on consumer access to MVPDs, OVDs and broadcast stations, as well as on the upstream and downstream relationships of these groups of video providers.”

Given that Pai has repeatedly said those services are increasingly competitive, the item appears to be softening the turf for a report that actually draws conclusions, or at least acknowledges that over-the-the top video seriously competes for eyeballs with broadcast TV. Certainly the Television Academy views them as competition given the number of Emmy nominations that went to Netflix (91) making them second only to … ABC, CBS, NBC or Fox? Nope, HBO.

But the report does more than ask about over-the-top; it clearly recognizes the rise of those video services. “The video services provided by OVDs continue to expand and evolve,” the FCC said. “In addition to the OVD services provided by Netflix, Amazon Prime Video and Hulu, both DBS MVPDs now offer OVD services that do not require subscription to their traditional MVPD services (i.e., Sling TV by Dish Network and DirecTV Now by DirecTV). Wireline providers are beginning to offer OVD service as well.”

Industry and other players have until Nov. 9 to weigh in with official comments on video competition.